Correlation Between Middlefield Banc and CB Financial
Can any of the company-specific risk be diversified away by investing in both Middlefield Banc and CB Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Middlefield Banc and CB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Middlefield Banc and CB Financial Services, you can compare the effects of market volatilities on Middlefield Banc and CB Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Middlefield Banc with a short position of CB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Middlefield Banc and CB Financial.
Diversification Opportunities for Middlefield Banc and CB Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Middlefield and CBFV is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Middlefield Banc and CB Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CB Financial Services and Middlefield Banc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Middlefield Banc are associated (or correlated) with CB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CB Financial Services has no effect on the direction of Middlefield Banc i.e., Middlefield Banc and CB Financial go up and down completely randomly.
Pair Corralation between Middlefield Banc and CB Financial
Given the investment horizon of 90 days Middlefield Banc is expected to generate 1.25 times less return on investment than CB Financial. In addition to that, Middlefield Banc is 1.79 times more volatile than CB Financial Services. It trades about 0.03 of its total potential returns per unit of risk. CB Financial Services is currently generating about 0.08 per unit of volatility. If you would invest 2,128 in CB Financial Services on December 2, 2024 and sell it today you would earn a total of 668.00 from holding CB Financial Services or generate 31.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Middlefield Banc vs. CB Financial Services
Performance |
| Timeline |
| Middlefield Banc |
| CB Financial Services |
Middlefield Banc and CB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Middlefield Banc and CB Financial
The main advantage of trading using opposite Middlefield Banc and CB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Middlefield Banc position performs unexpectedly, CB Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CB Financial will offset losses from the drop in CB Financial's long position.| Middlefield Banc vs. Home Federal Bancorp | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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